What is the difference between an exclusive agency and an exclusive right of sale listing quizlet?

Types of listing agreements

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A listing agreement is used to spell out the contractual relationship between your brokerage firm and a home seller. There are three different types of listing agreements: the open listing, the exclusive agency listing, and the exclusive right to sell listing.

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Open Listing (non-exclusive listing)

* Seller pays agent commission only if agent was the procuring cause of sale.
* Seller can have more then one agent try to find a buyer. Whoever finds the buyer is the procuring cause of sale.
* procuring cause: person who finds buyer and negotiates sale.

Open listing

If another agent finds a buyer for the property, you aren't the procuring cause and you won't get the commission. That's also true if it's the seller herself who finds the buyer.

Open listings are rarely used in residential transactions

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Exclusive Agency Listing

Seller pays listing agent if any agent finds the buyer, but not if the seller finds the buyer

And if some other real estate agent working for a different brokerage is the one who finds the buyer, the seller will still owe your brokerage the commission under the terms of the exclusive agency listing.

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But if the seller finds the buyer without the help of any real estate agent, she doesn't owe your brokerage a commission. The major problem with exclusive agency listings is the potential for a dispute between the listing brokerage and the seller over who procured the buyer.

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Language typically found in an exclusive agency listing agreement.

The clause shown above grants your brokerage the "sole and exclusive right to submit offers to purchase" to the seller. This means the seller can't enter into a listing agreement with any other agent without breaching his agreement with your brokerage.

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And here's the clause explaining the seller's obligation to pay your brokerage a commission. The seller agrees to pay a commission under two conditions: one, if you find "a buyer on the terms in this agreement, or on other terms acceptable to Seller," and two, if "Seller through any other real estate licensee during the term hereof, sells the property."

Thus, if any real estate agent—you or another agent—finds a buyer for the property, the seller owes your brokerage the commission.

Exclusive right to sell listing agreement

One agent (broker) is hired; broker receives a commission regardless of who finds the buyer for the property

Exclusive right to sell is most commonly used in residential real estate sales

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*If you find the buyer, you earn the commission. If another agent finds the buyer, you earn the commission. And if the seller finds the buyer, you still earn the commission.

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language typically found in an exclusive right to sell agreement

First, like an exclusive agency listing, an exclusive right to sell listing includes a clause granting your brokerage the exclusive right to submit offers to purchase to the seller.

*Another paragraph in the agreement explains the seller's obligation to pay your brokerage a commission.

The seller agrees to pay a commission if: a) the seller sells the property and the buyer doesn't back out before closing, or b) the firm procures a ready, able, and willing buyer.

So no matter who finds the buyer—whether it's you (the listing agent), the seller, or any other agent—the seller will owe you a commission if the property is sold during the listing period.

As you can see, an exclusive right to sell listing gives you a great deal of protection and decreases the chances of a dispute over who has earned the commission.

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Legal requirements for a valid listing agreement

A listing agreement must include all the basic ingredients of a contract: competent parties, offer and acceptance, consideration, and a legal purpose.

Competent parties, offer and acceptance, consideration, and a legal purpose.

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The first requirement is that the property be clearly identified. Real property is usually identified by its legal description—in fact, the NWMLS requires a legal description.

Note that a street address isn't enough. If you're ever tempted to use only a street address, remember that addresses are assigned by the post office merely to simplify mail delivery.

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Without the legal description—or some other unambiguous property description—a listing agreement isn't valid and binding.

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If you don't have the legal description when you're taking the listing, you should write something to the effect of "Legal description to be provided at a later date" in the blank for the legal description.

Then obtain the legal description and attach it to the agreement as soon as possible.

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You can get a copy of the property's legal description from a title insurance company, from the county tax records, or from the seller's deed.

Many agents find the title company to be the most convenient source of information.

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Brokerage authority and compensation

Secondly, a listing agreement must give the brokerage firm authority to market the property on the seller's behalf, in exchange for compensation (usually a percentage commission).

The brokerage firm earns the commission if it finds a ready, willing, and able buyer.

ready, willing, and able buyer

A ready, willing, and able buyer is one who makes an offer on the seller's terms and who's financially able to complete the transaction.

Working under a net-listing arrangement

A net listing provides that the seller will get a certain amount of cash from the sale, and the real estate agent will get anything over that net amount.

Net listing arrangements are frowned upon. This type of listing makes it too easy for an unscrupulous agent to take advantage of a home seller. (Net listings are illegal in some states, although not in Washington.)

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The last requirement for a valid listing agreement is that it be in writing and signed by the seller

The statute of frauds requires all listing agreements to be in writing and signed.

That means if you agree to work under the terms of an oral listing and the seller later refuses to compensate you, you won't be able to sue the seller for the commission.

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Listing agreement form

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Typical listing period is 90 days.

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Fill in every blank on the contract form

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Go over with your client what dual agency means and give a few examples of potential conflicts

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To help explain agency relationships to the seller, Washington law requires you to give the seller a pamphlet called "The Law of Real Estate Agency" before he signs the listing agreement.

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Remember, there can be no "mandatory" or "standard" rate of compensation for real estate agents in your area. Commission rates must be fully negotiable.

So when you're preparing a listing agreement form, never say or imply to the seller that you're filling in the standard commission rate.

What should you do if the seller objects to the rate your firm usually charges? The firm probably has an established policy for how to handle that situation.

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Paragraph 4 includes an extender clause, sometimes called a safety, protection, or carryover clause.

It provides that the seller must also pay the commission if he sells the property within six months after the listing agreement expires to someone who learned about the property through you or your firm during the listing term.

This provision helps protect you from buyers and sellers who might put off signing a purchase and sale agreement until the listing expires in order to avoid paying a commission.

The seller may have agreed to sell the home for less than the present asking price if the buyer will wait. So the delay would save both of them money.

The extender or safety clause is designed to protect you from that kind of arrangement.

Paragraph 5 also states that the agent won't represent the buyer in a distressed home conveyance unless the parties agree otherwise in writing. It's called a distressed home conveyance when a buyer:
purchases property from a distressed homeowner (someone in danger of foreclosure);
allows the homeowner to continue to occupy the property for more than 20 days past the closing date; and
promises to convey the property back to the homeowner or promises the homeowner an interest in or a portion of the proceeds from a resale of the property.

An agreement to participate in a distressed home conveyance should be drafted by an attorney.

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hold harmless clause

If you and your brokerage firm get into legal trouble because the seller wasn't entitled to sell the property, or because property information provided by the seller wasn't correct, the seller will be obligated to reimburse the brokerage for expenses incurred.

Paragraph 8 discusses closing costs. The seller agrees to pay for the buyer's title insurance policy and the real estate excise tax.

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It's customary for the seller to pay for the buyer's title insurance policy, since it's the seller who's promising that she's capable of transferring marketable title to the buyer.

And since excise tax is a tax on the sale of property, it's generally the seller who pays the tax.

Paragraph 11 states that you're entitled to show the property at all reasonable times. The seller can't interfere with your ability to market the property. If the seller does interfere—for instance, by making it impossible for you to gain entry to the home to show it to prospective buyers—then the seller will be liable for the full amount of your commission.

You should emphasize to the seller the importance of being able to show the property on fairly short notice. If you have an interested buyer, you don't want to have trouble getting permission to show the house.

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Only authorized to submit offers to purchase

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Paragraph 12 concerns the seller disclosure statement. In most residential sales in Washington, the seller's required to fill out a disclosure statement and give it to the buyer.

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Paragraph 14 provides that if one party is successful in enforcing the agreement, the other party is obligated to pay that party's attorneys' fees.

If the dispute goes to trial, the successful party will be entitled to an award of attorneys' fees and expenses, the amount of which will be fixed by the court.

Any lawsuit will take place in the county where the property is located.

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If a seller is married, it's a good idea to have his or her spouse sign the listing agreement too—even if the seller says that the spouse doesn't hold an interest in the property.

This is a precaution in case the seller is mistaken. Washington is a community property state, and it isn't always easy to tell whether property owned by a married person is separate property or community property.

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According to Washington's real estate license law, you must give the seller her copy at the time of signature.

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Listing input sheet

Every MLS listing agreement form has an input sheet. This is the portion of the form that provides specific information about the listed property.

Certain information is required, and the MLS won't accept the listing if this information is missing. These required items have a black dot next to them on the listing input sheet.

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Some sections of the input sheet have multiple choice checkboxes. These may show a number in parentheses, indicating the maximum number of boxes you can check.

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If there's an asterisk next to a checkbox, the default choice is Yes.

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Here at the top of the form, the listing number should be left blank. The MLS will assign the listing number when you submit the listing.

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The second section of this input sheet calls for listing data, including the listing price (how much the seller is asking for the property), the date the listing agreement was signed, and the date it will expire.

You also need to fill in the property's tax ID number and check a box to indicate whether a preliminary title report has been ordered yet.

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If the property's in a subdivision, fill in the lot and block numbers and the name of the subdivision. Then check a box to indicate which map book you're using. In this case, it's a Thomas Brothers map book.

Include the page number for the map showing the seller's property, and also the top and side coordinates for finding the property on the map.

Next, write in the name and phone number of the owner (the seller) and her city and state. Specify the occupant type. If the home is owner occupied, put an "O" in this space. If there's a tenant, put a "T" here. If the home is vacant, enter a "V." If the home is not yet built enter a "P" for presale.

Then fill in the occupant's name (even if it's the owner). In the "Phone to Show" space, write the phone number to call to set up a showing. This is usually the owner's number, but it could be yours (the listing agent's). Note whether a third party must give permission for the sale (as in a short sale, which requires lender approval).

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The 'Site Features' subsection is for describing the property's outside improvements, such as a barn, a deck, or a patio, or whether the lot is partly or fully fenced.

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The listing number is the number that was assigned by the MLS when you submitted the original agreement.

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Seller disclosure statement

If a buyer doesn't receive a disclosure statement (and hasn't waived the right to receive one), he can rescind the purchase and sale agreement at any time up until closing.

Seller must give buyer seller disclosure statement within 5 days

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If the seller provides a disclosure statement as required, the buyer has the right to rescind the purchase and sale agreement within three business days after receiving the disclosure statement.

The decision whether or not to rescind the agreement is entirely within the buyer's discretion.

If the buyer doesn't like any of the information disclosed—no matter how insignificant—the buyer can rescind the purchase and sale agreement. The buyer doesn't even have to identify specific concerns to the seller.

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If the buyer decides to rescind the purchase and sale agreement, he must give the seller written notice of the rescission within the three-day window after receiving the disclosure statement.

After rescinding the agreement, the buyer is entitled to a full refund of the earnest money deposit.

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After the three-day rescission period has ended, circumstances may change or information may come to light that makes the information in the disclosure statement inaccurate.

When this happens, the seller has two choices.

1. The seller can give the buyer an amended disclosure statement. This reactivates the three-day rescission period.
Or
2. the seller can make the necessary repairs or take other action that will make the disclosure statement accurate again. The corrective action must be completed at least three business days before the closing date. (Otherwise the closing would have to be delayed to allow for a new three-day rescission period.)

You should have the sellers complete the disclosure soon after they sign the listing agreement, so that you can discover any discrepancies between the listing input sheet and the disclosure form, and make corrections if necessary.

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The disclosure statement form is a statutory form. That means that the wording of the questions on the form is set by state statute. Neither you nor the sellers should change the pre-printed wording on any part of the form.

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Each question on the form should be answered; the seller can't leave any blanks. If a question doesn't apply, the seller should write "NA," for "not applicable."

Sellers should answer questions based on their actual knowledge.

And if they know the answer to a question, they can't answer "Don't Know."

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Seller Disclosures is broken down into 10 sections

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Vacant land listings

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